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There is a setting in web.config which allows you to set the max number of items in the custom report which is 1000 by default. The entry is as follows:

<maxWorkitemsInReportList count="1000" />

You can set this value whatever you want. However, as you pointed out there is a scroll issue on IE. The good news is when I tried this on TFS 2010 SP1, I couldn't repro the scroll issue, which means it was more likely fixed for SP1.